FDATA North America

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FDATA North America Responds to the Bank of Canada’s Retail Payments Supervision Consultation

Contact: Laine Williams, (202) 897-4757, [email protected] 

May 21, 2024, Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today responded to the Bank of Canada’s Retail Payments Supervision Consultation regarding its new supervisory guidelines for payment service providers (PSPs). FDATA North America expressed broad support for the Retail Payments Activities Act (RPAA) regulations while requesting additional clarity in the Bank’s guidance.

FDATA North America highlighted that implementation of the RPAA regulations will establish a robust regulatory framework for as many as 2,500 PSPs, significantly advancing Canada’s financial services modernization. In the response, FDATA North America emphasized that the RPAA regulations should facilitate the inclusion of payment use cases into Canada’s consumer-driven banking framework, as announced by Deputy Prime Minister and Minister of Finance Chrystia Freeland in the 2024 budget. By incorporating payment initiation use cases at this early stage, Canada can align with other G7 nations that have already established non-bank PSP regulations and open finance frameworks.

In its comments, FDATA North America provided detailed responses to key aspects of the supervisory guidelines. For operational risk and incident response, it urged comprehensive due diligence for outsourced service providers, flexible compliance standards like SOC II Type 2 audits, clear thresholds for distinguishing different types of PSPs, and an extended 24-hour reporting period for material breaches. It proposed that PSPs report incidents solely to the Office of the Privacy Commissioner (OPC) to reduce duplicative reporting. For safeguarding end-user funds, FDATA requested clarity on the definition of “holding funds” and recommended excluding firms that facilitate transactions but don’t hold funds. Additionally, it called for explicit criteria for changes warranting notification, particularly for cloud migration, to help PSPs manage risks while complying.

A full copy of the response is available here.

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FDATA North America Sends Letter to CFPB Advocating for Distinction Between Digital Wallets and Passthrough Payment Platforms

Contact: Laine Williams, (202) 897-4757, [email protected] 

May 2, 2024, Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today sent a letter to the Consumer Financial Protection Bureau (CFPB or Bureau) addressing concerns in the Bureau’s approach to digital wallets and passthrough payment platforms in both its Notice of Proposed Rulemaking (NPRM) on Personal Financial Data Rights and its NPRM on Defining Larger Participants of a Market for General-Use Digital Consumer Payments.

The letter highlighted a critical oversight in the CFPB’s draft regulations, which grouped digital wallets—designed to hold consumer assets—with passthrough payment platforms that merely facilitate transactions via accounts at other financial institutions. FDATA emphasized that this conflation could compromise regulatory effectiveness, confuse consumers, and stifle innovation in the market, with key points from the letter including:

  • General Definitions: The proposed rules offered overly broad definitions for digital wallets that did not acknowledge the operational distinctions from passthrough payment services.
  • Regulatory and Consumer Impacts: The lack of distinction was criticized for potentially imposing undue regulatory burdens on passthrough platforms without offering additional consumer protections.
  • Call for Tailored Regulation: FDATA North America advocated for the CFPB to refine its regulations to accurately mirror the diverse functionalities within digital financial services, ensuring focused and effective consumer protections.
  • Concern Over Data Duplication: The current approach could lead to unnecessary and confusing duplications in regulatory data requirements.
  • Innovation at Risk: The letter emphasized the importance of a regulatory framework that understands the operational realities of digital finance to foster innovation and ensure consumer safety.
  • Plea for Precise Rulemaking: FDATA North America stressed the need for rulemakings that distinguish between the various digital financial services, benefiting consumers, providers, and the broader financial ecosystem.

FDATA called on the CFPB to exempt passthrough payment platforms from being considered data providers under its Personal Financial Data Rights rule and from the supervisory requirements set forth in its payments Larger Participant Rulemaking.

A full copy of the letter is available here.

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Video Member Spotlight: Xero

This member spotlight features FDATA NA Spotlight with Michael Cascone, Vice President, Government Experience, Americas, Xero. Michael shared insights on how Xero is championing Open Banking to alleviate the financial burdens on small business owners across North America.

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Video Member Spotlight: Ozone API

This member spotlight features Eyal Sivan, General Manager, North America, aka. Mr. Open Banking, Ozone API. Mr. Open Banking delves into how SMEs can leverage new offerings from their suppliers and enhance their own services to customers, unlocking new avenues for growth.

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FDATA North America Statement on Budget 2024 Initiating Consumer-Driven Banking Framework

Contact: Laine Williams, (202) 897-4757, [email protected] 

Washington, DC, April 16, 2024 – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today applauded the government’s inclusion of a framework to deliver consumer-driven banking as part of Budget 2024.

FDATA North America, which has long advocated for consumer and small business benefits that an open finance framework will deliver for Canadians, commended the government for outlining a detailed vision of the design of open finance in Canada and a commitment to begin implementing the system through legislation this spring and announcing its intention to create an open finance framework in Canada that is interoperable with the framework that the U.S. Consumer Financial Protection Bureau will finalize later this year. As the government begins its work to finally deliver open finance in Canada in 2025, FDATA North America encourages the Department of Finance to include small business accounts under the scope of the framework to ensure that Canadian SMEs receive the same open finance benefits as consumers.

Steve Boms, Executive Director of FDATA, released the following statement:

“We are greatly encouraged by the Government of Canada’s commitment to advance open finance in Canada. The inclusion of Consumer Driven Banking in Budget 2024 marks a significant step for the financial empowerment of consumers and small and medium-sized enterprises. Once successfully implemented, this will foster a more innovative Canadian financial services marketplace, and promote a fairer and more inclusive financial services ecosystem. It reflects a global trend towards consumer-centric financial services and brings Canada in line with the regimes established by nearly every other G-7 nation.

We applaud the comprehensive framework announced in the budget and look forward to working closely with the government as it actualizes open finance to benefit Canadian consumers and small businesses.”

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Video Member Spotlight: ByAllAccounts

This member spotlight features Brian Costello, Head of ByAllAccounts Data Aggregation Strategy and Governance, Morningstar Wealth. Brian tells us how ByAllAccounts’s role in providing connectivity of consumer-permissioned financial data is critical in realizing the full potential of this data and explains ByAllAccounts’s high level of engagement with policymakers to promote finalization of the Dodd-Frank Section 1033 rulemaking.

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FDATA North America Sends Letter to Wyoming Governor Mark Gordon and Wyoming Legislators Urging Revision of Open Banking Legislation

Contact: Laine Williams, (202) 897-4757, [email protected] 

March 15, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) today sent a letter to Wyoming Governor Mark Gordon and Wyoming legislators including Representative Cyrus Western, Representative Daniel Singh, Representative Mike Yin, Senator Alfie Ellis, Senator Tara Nethercott, and Senator Chris Rothfuss, highlighting concerns about a Wyoming bill (HB 145) that was recently enacted into law and offering to provide input into Wyoming’s open banking regulations and financial innovation agenda.

As a leading advocate for consumer-permissioned, third-party access to financial data globally, our letter underscored the importance of aligning Wyoming’s open banking framework with global best practices, which provide complete control to consumers and small businesses over what data they decide to share with third parties. We pointed out that HB 145 deviates from this important open banking tenet.

As the Consumer Financial Protection Bureau moves to implement a federal open banking framework later through rulemaking later this year, we offered to engage in further discussions with Governor Gordon and the legislators to explore solutions that would make Wyoming’s open banking regulations a model for consumer empowerment and market competitiveness.

A full copy of the letter is available here.

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FDATA North America Submits Comments to Canada’s Consultation on Strengthening Competition in the Financial Sector

Contact: Laine Williams, (202) 897-4757, [email protected] 

February 28, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) today submitted comments to Canada’s Department of Finance as part of its consultation on strengthening competition in the financial sector. Our submission underscored the necessity for the enactment and realization of several previously announced initiatives that will provide increased competition in Canada’s financial sector once delivered.

FDATA NA’s feedback highlighted four cornerstone initiatives, each critical to fostering a more inclusive, innovative, and competitive financial ecosystem:

  1. Consumer-Driven Finance (CDF): We advocated for the swift advancement of CDF including the pivotal adoption of an open banking regime. This approach is designed to empower consumers and small and medium-sized enterprise (SMEs) with enhanced control over their financial data, serving as a catalyst for broadening the range of financial products and services available. Such a framework is indispensable for stimulating market competition and driving innovation.
  2. Real-Time Rail (RTR): Our comments emphasized the urgent need for the accelerated deployment of the RTR to modernize Canada’s payment infrastructure. This development is key to enabling instant payment processing capabilities that will benefit both consumers and SMEs, thereby encouraging innovation and improving efficiency across the financial sector.
  3. Retail Payment Activities Act (RPAA) Implementation: We stressed the importance of promptly implementing RPAA regulations to cover approximately 2,500 payment service providers (PSPs) within a comprehensive and robust regulatory framework. This initiative aims to significantly enhance the security, efficiency, and competitive nature of Canada’s payment systems.
  4. Canadian Payments Act (CP Act) Amendments: FDATA NA called for essential amendments to the CP Act, allowing regulated non-bank payment providers direct access to Canada’s payment rails. This strategic move is expected to democratize the financial services marketplace, lower transaction costs, and foster a more vibrant and competitive landscape.

Through the enactment and realization of these initiatives, FDATA NA envisions a fundamental transformation within Canada’s financial sector. Leveraging models of success from international jurisdictions, we highlighted the potential of our recommendations to significantly boost the sector’s competitiveness, inclusivity, and innovation. The ultimate beneficiaries of these reforms that will deliver a more competitive financial ecosystem will be consumers, small and medium-sized enterprises, and the broader Canadian economy.

A full copy of the submission is available here.

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FDATA North America Submits Comments to Canada’s Department of Finance Pre-Budget Consultations 2024

Contact: Laine Williams, (202) 897-4757, [email protected] 

February 9, 2024 Washington, DC – The Financial Data and Technology Association of North America (FDATA) submitted comments to Canada’s Department of Finance as part of its pre-budget consultations in advance of Budget 2024. Our submission emphasized the necessity for Canada to build upon the inclusion of consumer-driven banking (CDB) in the 2023 Fall Economic Statement, moving towards a fully realized Canadian open finance framework. The letter underscored the significance of CDB as a foundational step towards financial empowerment for consumers and small and medium-sized enterprises (SMEs), fostering a more innovative and competitive financial services marketplace in Canada.

Our letter urged the Canadian government to:

  • Legislate a CDB Framework: Introduce specific language in Budget 2024 to legislate the CDB framework, empowering consumers and small- and medium-sized enterprises (SMEs) with secure access to their financial data, thus ensuring Canada remains competitive in the global financial ecosystem.
  • Establish a Robust Governance Entity: Allocate funding for the creation of a new, neutral, and transparent governance entity to oversee the CDB framework. This body should be capable of making quick, binding decisions and be accountable for its actions, ensuring the framework’s success and longevity, and should be tasked with framework management, API auditing, accreditor oversight, technical standards oversight, liability apportionment, and dispute resolution.
  • Outline a Vision for Open Finance: Beyond CDB, Budget 2024 should detail the government’s approach to open finance, the next evolution in financial services, which promises to unlock unprecedented market innovation and competition for the benefit of Canadian consumers and SMEs.

In the submission, we also asserted that any CDB governance entity in Canada must be neutral (i.e. not controlled by any particular stakeholder(s) with commercial interests in the ecosystem), transparent (i.e. it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process), nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), and accountable (i.e. explain its decisions and actions and be subject to judicial oversight and administrative law processes) with all stakeholders in the system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.

A full copy of the submission is available here.

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FDATA North America: Comment Letter Submitted on CFPB’s Section 1033 NPRM

Contact: Laine Williams, (202) 897-4757, [email protected] 

December 27, 2023 Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing more than 30 financial technology companies and consumer-permissioned data access platforms in Canada and the United States, today filed a comment letter in response to the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking (NPRM) on personal financial data rights, which will implement Section 1033 of the Dodd-Frank Act.

Steve Boms, Executive Director of FDATA, released the following statement:

“We are pleased to comment on the CFPB’s proposed personal financial data rights rulemaking, which once implemented, will create a legally binding consumer financial data right in the United States. Under this open finance regime, consumers will have the right to access and securely share their financial data electronically with third-party providers of financial tools, products, and services, heralding an era of improved competition and greater consumer control in the U.S. financial services marketplace. Beyond the obvious benefits to consumers, FDATA views this rulemaking as a crucial step forward for U.S. competitiveness in a global economy in which many other countries have already developed and implemented open finance regimes.

Our comments to the CFPB underscore areas for potential improvements in the final rule. We believe these changes will more effectively align the rule with the vision the CFPB presented when announcing its pursuit of this rulemaking, as well as with the open finance regimes implemented by other jurisdictions globally. FDATA looks forward to continued engagement with the CFPB as it works to finalize this pivotal rule in 2024.”

A FDATA member company released the following statement alongside the submission of FDATA’s comment letter.

Brian Costello, Head of Data Aggregation Strategy and Governance at Morningstar Wealth, a member of FDATA, stated:

“Morningstar Wealth actively champions the interests of both investors and the professionals who serve them as the U.S. Open Banking landscape transitions from a commercially managed ecosystem to a regulated financial data right for consumers. The CFPB’s Notice of Proposed Rule Making underscores the Bureau’s strong commitment to addressing this pivotal issue, which holds significant implications for millions of Americans. FDATA’s response letter draws upon the collective expertise of its diverse membership of responsible innovators to provide practical guidance and recommendations essential for the seamless adoption and execution of the final rule. As long-standing members of FDATA, we are pleased to contribute our perspective and experience to this response.”

Click here to read FDATA’s full comment letter.

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